Finance guru Mark Bouris makes bleak forecast as the Reserve Bank considers raising the cash rate for the 13th time in 14 months
- Yellow Brick Road loans chairman predicts rate rise
- Accuses RBA of wanting huge unemployment spike
Financial expert Mark Bouris believes the Reserve Bank of Australia will raise the cash rate for the 13th time since May 2022 when it meets in Sydney on Tuesday.
The Yellow Brick Road home loans chairman has also accused the central bank of wanting to see 140,000 people lose their jobs so it can keep inflation under control.
In a video posted to Instagram, Mr Bouris and economist Stephen Koukoulas both shared their prediction for which way the RBA will go, and tipped a rise, piling on the pain for home loan borrowers.
In doing so, they were backing two of the big four banks, Westpac and ANZ, which both expect a 0.25 per cent lift in both July and August.
National Australia bank said a rate rise on Tuesday is 50-50, while the Commonwealth bank said there is a 40 per cent chance of a rise.
Financial expert Mark Bouris (pictured with model Monika Radulovic) believes the Reserve Bank of Australia will raise the cash rate for the 13th time in July
The central bank has increased the cash rate every month since May 2022, apart from one pause in April this year.
In that time, the cash rate has risen from a record low of 0.1 per cent to an 11-year high of 4.1 per cent.
Mr Bouris has strongly criticised what he calls the RBA’s actions and believes more hikes could see financially stretched mortgage holders offload homes in a ‘fire sale’.
He pointed to comments by RBA deputy governor Michelle Bullock, who said last week that Australia’s unemployment rate will need to rise to 4.5 per cent to halt inflation, a leading cause of the rate rises.
‘The only reason I say it is because Michelle Bullock’s paper, out last Tuesday, talked about unemployment at four and a half per cent,’ he said.
‘Unless we see an unemployment (figure) with a four in front of it, I think they’re going to put rates up again. I think that’s their indicator.’
Mr Bouris has strongly criticised what he calls the RBA’s actions and believes more hikes could see financially stretched mortgage holders offload homes in a ‘fire sale’. Pictured: RBA Governor Philip Lowe
With the unemployment rate currently at 3.5 per cent, a one per cent rise would mean about 140,000 losing their jobs.
‘That’s 140,000 people, the MCG plus, full of people who currently have a job who won’t have a job by the time the RBA is finished,’ Mr Koukoulas warned.
He added that the RBA has a ‘bee in their bonnet’ about the labour market.
The ABC’s veteran finance expert Alan Kohler has also called on the Reserve Bank to stop damaging interest rate rises, pointing out inflation was flat in May.
While the consumer price index rose by 5.6 per cent over the year, the monthly measure showed a zero increase in inflation.
From January to May, the monthly average was 0.24 per cent, based on the seasonally adjusted figures from the Australian Bureau of Statistics.
This included a 0.2 per cent drop in January, a 0.6 per cent climb in February, a 0.5 per cent rise in March and a 0.3 per cent increase in April.
On an annualised basis, inflation for the first five months of 2023 worked out at 2.88 per cent – a level within the Reserve Bank of Australia’s 2 to 3 per cent target.
Kohler said this meant the RBA should stop hiking rates, pointing out the monthly increases in the CPI had been declining since peaking at 1.1 per cent in November.
‘So memo the Reserve Bank: the most recent inflation rate in Australia is zero,’ he said on the ABC News.
He later tweeted for the rate rises to stop in upper case.
‘The RBA must STOP HIKING INTEREST RATES,’ he said.
Why does the Reserve Bank keep raising interest rates?
Australia’s central bank has been hiking the official cash rate to bring the cost of living under control, with inflation currently sitting at 5.6 per cent from the year to May.
Inflation has been surging in the wake of the Covid pandemic with huge government stimulus totalling more than one third of a trillion dollars – at a time of record low interest rates – driving up prices across Australia.
A range of other global factors including the war in Ukraine and supply chain chaos has also compounded the cost of living crunch.
But by raising the cash rate and making money harder to borrow, it should limit the supply of money and help bring prices down.
Cold comfort to those forced to shell out more on their mortgage.